SEPTEMBER 11, 2019

By Vijay Kumar

RULE 117 of the CGST Rules, reads as:

117. Tax or duty credit carried forward under any existing law or on goods held in stock on the appointed day.-(1) Every registered person entitled to take credit of input tax under section 140 shall, within ninety days of the appointed day, submit a declaration electronically in FORM GST TRAN-1, duly signed, on the common portal specifying therein, separately, the amount of input tax credit of eligible duties and taxes, as defined in Explanation 2 to section 140, to which he is entitled under the provisions of the said section:

Provided that the Commissioner may, on the recommendations of the Council, extend the period of ninety days by a further period not exceeding ninety days.

The 29th of September 2017 would have been the last day to file the TRAN-1 declaration.

On 15.9.2017, by Notification No. 34/2017-CT dt. 15.09.2017, a new Rule 120A was inserted to read as:

120A. [Revision of declaration in FORM GST TRAN-1] Every registered person who has submitted a declaration electronically in FORM GST TRAN-1 within the time period specified in rule 117, rule 118, rule 119 and rule 120 may revise such declaration once and submit the revised declaration in FORM GST TRAN-1 electronically on the common portal within the time period specified in the said rules or such further period as may be extended by the Commissioner in this behalf.

By Order No. 02/2017-GST, dated 18.09.2017 and 03/2017-GST, dated 21.09.2017 the period for submitting the declaration in FORM GST TRAN-1 was extended till 31st October, 2017.

This was extended till 30th November 2017 by Order Nos 7 and 8 dated 28.10.2017.

Order Numbers 9 and 10 dated 15.11.2017 extended the date to 27th December 2017.

On 17th September 2018, by Order No. 4/2018, the period for submitting the declaration in FORM GST TRAN-1 was extended till 31st January, 2019, for the class of registered persons who could not submit the said declaration by the due date on account of technical difficulties on the common portal and whose cases have been recommended by the Council.

By Order No. 01/2019-GST, dated 31.01.2019, this date was further extended till 31 st March 2019.

So, the last date is over. The portal is closed. No more TRAN-1. Is it really so? How serious is this last date for filing TRAN-1?

A few days ago, the Gujarat High Court in the Siddharth Enterprises case - 2019-TIOL-2068-HC-AHM-GST pronounced,

The respondents are directed to permit the writ applicants to allow filing of declaration in form GST TRAN-1 and GST TRAN-2 so as to enable them to claim transitional credit of the eligible duties in respect of the inputs held in stock on the appointed day in terms of Section 140(3) of the Act. It is further declared that the due date contemplated under Rule 117 of the CGST Rules for the purposes of claiming transitional credit is procedural in nature and thus should not be construed as a mandatory provision.

In an order delivered two days ago, the Allahabad High Court - 2019-TIOL-2145-HC-ALL-GST directed the Government to reopen the portal within two weeks from today (16.09.2019). In the event they do not do so, they will entertain the GST TRAN-1 of the petitioner manually and pass orders on it after due verification of the credits as claimed by the petitioner. They will also ensure that the petitioner is allowed to pay its taxes on the regular electronic system also which is being maintained for use of the credit likely to be considered for the petitioner.

On 9th August 2019, the Delhi High Court in Chogori India Retail Ltd - 2019-TIOL-1823-HC-DEL-GST, observed,

It is also not in dispute that there have been numerous glitches on the GST Portal in making it difficult for uploading of the TRAN-1 Forms. This Court has itself issued orders in numerous cases permitting Petitioners to be afforded one more opportunity to either file the TRAN-1 Form electronically or manually.

Accordingly a direction is issued to the Respondent to either re-open the Portal to enable the Petitioner to file its TRAN-1 Form electronically failing which to permit it to file manually on or before 13th September, 2019. Thereafter, the Petitioner's claims will be processed expeditiously in accordance with law.

Nearly two years ago, the Allahabad High Court in the case of Continental India Pvt Ltd - 2018-TIOL-2747-HC-ALL-GST, directed the Government to reopen the portal within two weeks. In the event they do not do so, they will entertain the application of the petitioner manually and pass orders on it after due verification of the credits as claimed by the petitioner. They will also ensure that the petitioner is allowed to pay its taxes on the regular electronic system also which is being maintained for use of the credit likely to be considered for the petitioner.

Thus right from the beginning, this TRAN-1 has been mischievous and has been doing the rounds in the North Block and several High Courts. All because, they forgot to put their system in place.

A declaration that was to be filed by the end of September 2017, is still a matter of dispute, litigation and confusion in September 2019.

GST has made the courts full, not the coffers. In the last three years, GST must have contributed at least 10,000 cases in the High Courts alone. If there is one business activity that is doing well in spite of a battered economy, it is GST litigation. Who is responsible?

Sabka Vishwas

The scheme is open, but not many are coming in, not because they don't want to, but because the doors are not opening. It is almost impossible to register and access the site to be able to avail the benefits of the scheme. And there is nobody to help. All the seminars, webinars and analyses by experts only result in reading out the text of the scheme without clarifying the doubts. The pre-June 30th hearing confusion in the scheme is beyond Einsteinian erudition.

Law cannot be made simple and practical or perhaps they will not be. There is no use complaining, better relax and enjoy. Taxation is fun - for whom?

Until next week